Tennessee Secretary of State to launch new online UCC filing system on July 1, 2013

The ability to file documents online is one of the many ways technology has made the practice of law easier. Faced with a looming deadline, attorneys no longer need to rush to the Courthouse before closing time. Nowadays, they pdf their pleading and can upload it at 11:59 from home.

Starting on July 1, 2013, the Tennessee Secretary of State will allow parties to make Tennessee Uniform Commercial Code (UCC) filings online. Information about this program can be found in this release.

To prepare Tennessee UCC filers for this process, the Secretary of State has posted a number of links to a number of training videos, which cover topics such as:

  • Filing a Tennessee UCC1 Financing Statement
  • Filing a Tennessee UCC3 Amendment – Termination
  • Filing a Tennessee UCC3 Amendment – Continuation
  • Filing a Tennessee UCC3 Amendment – Party Update
  • Filing a Tennessee UCC3 Amendment – Assignment
  • Filing a Tennessee UCC3 Amendment – Collateral and Max Indebtedness Change
  • Filing a Tennessee UCC5 Information Statement
  • Filing a Tennessee UCC11 Information Request
  • Searching the Tennessee UCC Database

The electronic filing system also coincides with the implementation of the 2010 Amendments to UCC Article 9, which also become effective on July 1, 2013. I’ll discuss those in a later post.

For now, I’ll say that I’m really excited about the prospect of filing and searching UCC records online. This is a great development for Tennessee lawyers.

Post-It Note: Creditor’s Rights During Bankruptcy

As many of you know, I’ll occasionally use this blog as a place to post reminders or cites to cases for my own benefit. As you’ve seen in the past, I call those entries “Post-It Notes.”

I saw this CLE seminar and thought the content would be helpful (plus, it’s a good outline for any future Creditor’s Rights CLEs I might teach). It’s presented by NBI Seminars and is called “Creditor’s Rights in Bankruptcy.” It’s set for July 31, 2013.

Here’s the Agenda:


  • Case Evaluation
    • 10 Questions to Ask Before Getting Started
    • Important Timeline Considerations
    • Determining the Priority of Claims
  • Miscellaneous Creditors’ Rights
    • The Involuntary Bankruptcy as a Collection Remedy
    • Examination of Debtor’s Affairs
    • Rule 2004 Exams
    • Creditors’ Committees in Chapter 11 Cases
    • Dismissal or Conversion of a Bankruptcy Case
    • Appointment of and Communication With a Trustee or Examiner
    • Recovery of Property for the Benefit of Creditors
    • Municipal Collection Issues
  • Ethical Representation During Bankruptcy

    • Collection Letters and Communication With the Debtor
    • Misrepresentation
    • Intermingling Activities of Collection Agency and Attorney
    • Harassment
    • Attorneys’ Fees
    • Avoiding Violations of the Injunction
  • Overview of Creditors’ Rights Under Each Chapter
    • Chapter 7
    • Chapter 13
    • Chapter 12
    • Chapter 11
    • When the Debtor Converts From a Chapter 13 to a Chapter 7 Case
    • Significance of Valuation of Collateral
  • Claims and Distributions
    • Filing and Allowance of Claims
    • Objections to Discharge
    • Objections to Confirmation
    • Dealing With Objections to Claim
    • Distribution to Creditors
    • UCC Filing
    • What to do When the Debtor Defaults on the Repayment Plan
    • Recovery of Fraudulent Transfers
    • Reaffirmation Agreements
  • Automatic Stay
    • Broad Scope of the Automatic Stay
    • Obtaining Relief From the Automatic Stay
    • Motion for Lift of Stay: How, Why You Can Request It
    • Changes in the Automatic Stay in Consumer Cases Involving Repeat Filers
    • Changes in the Automatic Stay in Certain Other Limited Situations Involving Liens on Real Estate
    • Changes in the Automatic Stay Involving Consumer Landlord/Tenant Law
    • Exceptions to the Automatic Stay and Related Changes
    • Monetary Sanctions for Automatic Stay Violation Where Notice is Lacking
  • Representing Creditors in Adversary Proceedings
  • Special Rights in Particular Property
    • Reclamation Rights
    • Setoffs
    • Landlords and Equipment Lessors


New Trial Opinion on Tennessee Post-Foreclosure Deficiency Statute Shows a Creditor-Friendly Trend in Interpreting “Materially Less”

A few months ago, I argued the first appellate case construing Tenn. Code Ann.  § 35-5-118, which is the new Tennessee post-foreclosure deficiency judgment statute. As you may recall from my blog post about the new law, the statute provides a possible defense to a deficiency action, where the debtor can show “by a preponderance of the evidence that the property sold for an amount materially less than the fair market value…”

In layman’s terms, a foreclosed borrower may be able to avoid a judgment for the remaining debt if he can show that the foreclosure buyer drastically under-bid at the foreclosure.

All across the state, this statute has resulted in two fights:

  1. What was the fair market value at the time of the foreclosure? and
  2. Was the foreclosure sale price “materially less” than the fair market value?

A big problem under the statute has been that “materially less” isn’t defined in the statute or anywhere else in Tennessee law.

In the resulting GreenBank v. Sterling Ventures  opinion, the Court of Appeals issued a bank-friendly interpretation,  offering guidance as to what “materially less”  means by saying that a sale price of 86% is not “materially less.”

I’ve heard from a number of bank lawyers since that opinion, complaining that 86% isn’t low enough. I’ve told them, just wait, the Sterling Ventures opinion didn’t set the “floor;” there is room in the statute for lower values, which will be established in future cases (in the Sterling Ventures case, the bid at issue was 88-91%, so it didn’t require the Court to define the lowest possible percentage).

This past week, my firm received another favorable  opinion from the Williamson County Chancery Court. In this Opinion (click to review), the Court recognized this issue, and rightfully upheld lower percentage bid amounts. The Court, following the lead of the Court of Appeals, cites the Holt v. Citizens Central Bank case, which recognized that a 50% recovery at foreclosure is a customary result.

While this doesn’t suggest that 50% is the magic number/floor percentage, this analysis shows a judicial tendency in interpreting the statute at a lower range than most debtors have argued.

With any new law, it takes a few decisions to “battle test” how it works. So far, the parameters of Tenn. Code Ann.  § 35-5-118 are being defined in a way that favors creditors.

Contingent Fees: The Good, The Bad, and The Reason Many Lawyers Don’t Handle Them

Generally, a client pays a lawyer for his services by the hour, which is exactly what it sounds like. If a lawyer with an hourly rate of $250 does an hour’s worth of work, then the client owes the lawyer $250.

In some instances, a lawyer will handle a matter on a contingency fee basis, which means that the fee is paid only if there is a favorable result (i.e. “I don’t get paid unless YOU win”). The exact fee is calculated as a percentage of the amount of money recovered in the case.

Because I do creditor’s rights law, I’m sometimes asked to handle matters on a contingent fee. With the economy being where it is, however, I’m far less likely to accept creditor cases on this agreement. With so many people broke, the possibility of payment is lower than ever and the fight to get that money is harder than ever.

Proponents of contingency fees argue that they provide access to lawyers and the justice system for people who, otherwise, couldn’t afford lawyers (and that expensive hourly rate). That’s true.

My experience with accepting clients on a contingency fee billing is that those clients–i.e. the ones who are not paying for every phone call, every email, every step of the litigation–are the ones who have the most unreasonable demands of my time. Paying good money for an hour long phone call has a good way of discouraging any unnecessary hour long phone calls. If a nasty fight on an inconsequential issue doesn’t cost them anything, well, of course, they want you to fight on that issue.

When a client asks me to take a collections case on a contingent fee basis, I’m generally pretty frank with them in response. I explain the factors I consider: (a) how much actual work will  be required; (b) whether the defendant has lots of assets;  and (c) whether payment of the claim will be very quick. In short, it’s only a good deal for  the lawyer if it’s going to be a windfall involving not much work and a quick payment.

In this economy, it’s rare to find the collections referral that pays quickly and without much effort. In a contingency fee case, the risk of nonpayment rests entirely on the lawyer’s shoulders. From a client’s perspective, the risk is that a lawyer is going to lose motivation to work on a case over a long duration when it doesn’t produce results (i.e. money).

My advice to lawyers is to be careful on these types of cases; my advice to the clients would be the same.

Last Chance to Learn: Creditors’ Rights in Tennessee: 10 Collection Strategies

A quick reminder: Tomorrow, June 6, 2013, I’ll be teaching the CLE  presented by M. Lee Smith Legal Publishers called Creditors’Rights in Tennessee: 10 Collection Strategies.

This is a one hour audio seminar, that will cover the usual Tennessee collections lawyer song and dance. Things like:

  • Things to consider prior to declaring a loan in default and filing a collections lawsuit
  • Issues in deciding between Chancery Court and General Sessions Court
  • Importance of knowing your Statute of Limitations
  • Making sure you Sue the Right Party
  • Judgment Liens and why they work
  • Fraudulent Transfers
  • Overview of bankruptcy issues, including preferences and Trustee avoidance actions
  • Common roadblocks to collecting money, including domestication of foreign judgments

It’s one hour of CLE credit, and, hopefully, what I teach you during seminar will put some money in your clients’ pockets.